Estate planning

Estate planning is the process of accumulating and disposing of an estate to maximize the goals of the estate owner. The various goals of estate planning include making sure the greatest amount of the estate passes to the estate owner's intended beneficiaries, often including paying the least amount of taxes and avoiding or minimizing probate court involvement. Additional goals typically include providing for and designating guardians for minor children and planning for incapacity.

Estate planning tools

The tools involved in estate planning include the will, various types of trusts, beneficiary designations, powers of appointment, various forms of property ownership (Joint tenancy with rights of survivorship, tenancy in common, tenancy by the entirety, etc), gifting, and powers of attorney, specifically the durable financial power of attorney and the durable medical power of attorney. After widespread litigation and media coverage surrounding the Terri Schiavo case, virtually all estate planning attorneys now advise their clients to also create a living will. Note that many people (and even some attorneys) confuse a living will with a durable medical power of attorney. The former controls solely those decisions that must be made at the end of the patient's life, while the latter is used to give decision-making authority to someone else (usually a family member or close friend). This person, the attorney-in-fact, then makes all medical decisions leading up to the person's death, but has no such power to make end of life decisions for the patient. Those decisions are made "by the patient" in the living will; in the absence of a living will, and where the patient is incapable of making end-of-life decisions for him or herself, such choices are left to family members.

Remainder interests

The tax code allows wealthy people to set up charitable remainder trusts and set up qualified personal residence trusts to own their personal residence yet leave it to their children without estate tax.

Paying taxes

Because the United States tax code does not tax life insurance proceeds as income, a life insurance trust could be used to pay estate taxes. However, if the decedent holds any incidents of ownership like the ability to remove or change beneficiary, the proceeds will remain in his estate. For this reason, the trust vehicle is used to own the life insurance policy and it must be irrevocable to avoid inclusion in the estate.

Estate planning mediation

Estate planning mediation serves as preventative measure against future litigation. In the mediation session, a person can include his/her family members and beneficiary organization representatives in their discussion about plans for transferring assets in the future. Because of the potential conflicts associated with blended families, step siblings, and multiple marriages, creating an estate plan through mediation allows people to confront the issues head-on and design a plan that will minimize the chance of future family conflict and meet their financial goals.

External links

* [ National Committee On Planned Giving website] organization for estate planners

ee also

*Charitable trust
*Trusts and estates

Wikimedia Foundation. 2010.

Look at other dictionaries:

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  • planning — plan‧ning [ˈplænɪŋ] noun [uncountable] when you think carefully about something you want to do in the future, and decide exactly how you will do it: • If you want to ensure a trouble free retirement, it s never too early to start financial… …   Financial and business terms

  • Estate Planner — Estate Planner, a professional that creates an estate plan. This professional works with an estate owner to maximize their goals. This is a legal and tax specialty for an attorney or an accountant. Further, the key to estate planning is to help… …   Wikipedia

  • estate planner — estate plan·ner n: a professional or business that provides advice regarding estate planning and sometimes prepares necessary legal documents Merriam Webster’s Dictionary of Law. Merriam Webster. 1996 …   Law dictionary

  • Estate tax in the United States — This article is about Estate tax in the United States. For other countries, see Inheritance tax. Part of a series on Taxation Taxation in the United States …   Wikipedia

  • planning — noun ADJECTIVE ▪ careful, detailed, meticulous, thoughtful ▪ poor ▪ initial ▪ the initial planning stage …   Collocations dictionary

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